Monday Mornings with Madison

The Art of Negotiating Business Deals

Word Count:  1,565 

Estimated Read Time:  6  min.

One of the most challenging parts of working with a new client is finalizing the business agreement.  This is the process in which the parties hammer out the details of the contract.  The bigger the deal, the more complex the agreement.  And negotiating the final terms of a complex deal can have its challenges.  In those situations, a sales professional might find himself in a position where the customer holds all the cards.  The salesperson may have invested a lot of time and effort in developing the opportunity.  He may have even promised his boss that a commitment was imminent.  The salesperson may feel boxed in and the customer may think he can dictate the terms.  That’s a losing proposition for the salesperson and his company, even if they land the deal.  Business deals that start out very lopsided – a win-lose proposition – don’t bode well for a good long-term business relationship. Continue reading

Leave a comment

Using Chess Strategy in Business, Part 2

Word Count:  2,292

Estimated Read Time:  9  min.

There are many benefits that come from playing chess.  Psychologists often cite chess as an effective activity to help improve memory function.  That is probably why chess is recommended in the fight against Alzheimer’s.  Playing chess can also help the mind solve complex problems and work through ideas.  It is also thought to increase one’s intelligence, although that’s not been scientifically proven.  And the effects of chess on children – which has been correlated to children getting better grades in school — has led to chess being introduced in schools in a multitude of countries.  That said, many are still intimidated by chess because it is perceived as a game for geniuses.  But while chess is a thinking-man’s game — one that requires a great deal of strategic thought and tactical reflection — it is not just for geniuses and savants.  Anyone can learn to play chess and improve through study and practice. Continue reading

Leave a comment

Using Chess Strategy in Business, Part 1

Word Count:  1,804

Estimated Read Time:  7  min.

Chess is one of the fairest games there is.  In chess, opponents start with an identical force.   The entire playing field of a chess game is out in the open.  A player can see every move an opponent makes as soon as he makes it.  And, in chess, no dice are used so it is never a game of “chance” and there is no luck of the draw.  Moreover, there is no referee involved in chess that might “throw” a game or be partial to one side over the other.

The business world is perhaps not as fair, balanced and chivalrous as a game of chess.  In business, competitors seldom start with identical workforces, and a company can easily hire a better force.   In business, a lot of deal-making is done behind-the-scenes and a company might not learn about a competitor’s initiatives until much later.  And, in business, a company can innovate a product or service – or how it delivers that product or service — in ways that totally change the playing field for competitors.  In fact, a company can innovate to the point of actually changing the game.   Think of how Uber has revolutionized short-distance transportation and how Airbnb is changing the hospitality industry.

So, in many ways, business and chess are different.  That said, chess is all about strategy and tactics. The best chess players are those who have the ability to stay ahead of their opponents and strategize goals that can be achieved as quickly as possible.  In that regard, running a company is a lot like a game of chess.  To stay ahead of the competition, companies must think strategically and be quick to implement.  That’s where chess strategy can give business leaders guidance.   While many games use methods that can be incorporated into how business decisions are made, chess requires strategic decision-making, connections, timing, tactics and evaluation.

The Way of Strategy

There is a concept in Japanese culture dating back many centuries that says “From One Thing, Know Ten Thousand”.  It means that key strategies are transferrable and have a wider application.  Achieving mastery in one discipline can give the person the tools to transfer those skills to all other areas of life.  The strategies used in chess – at deeper levels – can provide a blueprint for strategy, decision and action in business and in life.  According to Danielle Rice, a Senior Managing Consultant at IBM’s Healthcare Practice and a chess player, “Chess can have a strong influence on business strategy and work life.  Chess develops one’s discipline for critical thinking, analyzing ones plans targeted to results, and most importantly it teaches patience and the need to learn how to handle (and come back from) defeats gracefully.”

Business owners who want to take their company to the next level would do well to at least learn the key strategies used by the greatest chess masters and understand how they can be applied to business.

Seven Strategic Principles of Chess

1. Take the Initiative

In chess, white always plays first, and therefore starts with a small advantage.  However, frequently the first player to mount a coordinated strategy often gains the ultimate advantage.  A strong initiative holds the other player back, upsets his timing and rhythm, and puts the one who took the lead in control.  As the saying goes, the best defense is a good offense.

In business, this means that a company must take the initiative to innovate, try new technologies, revolutionize operations, or dare to be different in the approach to sales and marketing.  Taking the initiative can mean making an effort to expand into new markets or an effort to go after clients that might be considered “un-gettable” or simply change how “the game is played.”  And it means that companies must move quickly to implement initiatives.  As the saying goes, the early bird gets the worm.

Case in point.  Amazon initially partnered with Borders Books to assist them with their online book sales.  But Amazon understood the ecommerce world better.  Soon, they were able to go beyond just facilitating Borders’ online sales.  Amazon captured online market share.  Borders was unable to adapt to the ecommerce world and eventually went out of business.   Amazon then went on to transform the book publishing industry, allowing authors to self-publish and sell to readers directly.  This was a game-changer for the book publishing industry.  Amazon started with a small advantage.  They understood online sales and could see how technology could and would change the book selling and book publishing industries.  They pushed their initiatives forward, leading the way in innovation.  Now Amazon is doing the same thing in the retail sector.  As in chess, Amazon was one of the first companies to pursue new business initiatives and gained the ultimate advantage.

2. Follow Through to the Finish

All things come to an end.  Bridges collapse.  Homes deteriorate.  Bodies weaken and fail.  Even the biggest companies can lose initiative and market share if they lose focus.  The same thing happens in chess when a player’s rhythm becomes deranged.  In chess, when a player starts to make bad moves that cost him part of his force, the best chess players continue to pursue without ceasing to the finish.  In a game of chess, the goal is to win the game so a player cannot stop taking the initiative until the game is over.

To apply this chess strategy to business means a business leader must stay focused to ensure that any initiatives pursued and market share captured is not lost later.  The business must not let up.  Per the adage of big game hunters in Africa, “It is the dead lion that gets up and eats you.”  That is meant to be a reminder that, in chess and in business, one must never let the guard down even when things are going well.  A business must always be striving to do better.  Innovate.  Evolve.  Grow.  Expand.

3.  Impenetrable Defense

Floyd Patterson, the youngest man to win the heavyweight championship in boxing in 1956, once said that “the greatest pleasure of boxing is making the other guy miss.”  This strategy is important not just in boxing.  It is also important in martial arts.  The best martial artists are also adept at deflecting the power of lethal blows back upon an opponent.  And, this strategy is equally important in chess.   For the best chess masters, a solid defense provides the underpinning of every successful proactive strategy.  The best chess masters wriggle out of difficult plays while appearing cool and confident even when the game is not going well.  Their technique is to blunt the other player’s efforts and protect until it is safe to take proactive steps again.

In business, few business leaders like the idea of taking a defensive position.  However, every company at some point will be forced to do so.  And while a company must be good at being proactive (taking the initiative and following through), it must also be able to protect itself.  Being behind a competitor in terms of feature development, scrambling to do work for a large client for razor thin margins, or agreeing to big salaries or bonuses just to keep from losing a valuable salesperson or leader– whatever the situation, it may not feel good when a company is boxed in.  When someone else is dictating strategy, tactics, resource allocation or agenda, it can be frustrating even if it is necessary.

Indeed, the road to long-term success is seldom a straight line for companies.  Businesses make big bets on strategies — only to discover that the playing field has shifted once again.  It’s easy to become flustered by setbacks.  But successful leaders know how to gain control of situations that are out of their control, retool themselves, and rebound quickly from the setback.  In playing defense, the key is to ensure that a business protects the company long-term.

Case in point.  Ciena Corp was first to market with what is now a critical technology: dense wave division multiplexing (DWDM). Carriers such as Sprint and WorldCom quickly became converts to the technology, which essentially increases bandwidth-transmission capacity across fiber-optic cables. In 1997, Ciena enjoyed the best-performing IPO of the year, more than doubling its share price.  Ciena’s leadership then snared a merger deal with Tellabs, an old-line telecommunications carrier in the Chicago area. They spent more than four months sorting out details and cultural matches with Tellabs.  But literally minutes before the two companies’ shareholders were scheduled to vote on the merger, AT&T (without testing the products) decided not to close an expected contract to use Ciena’s more-advanced DWDM offerings.  Ciena’s stock price collapsed, from more than $55 to barely more than $31.

The company’s business was fine: It was on track to make its revenue estimates, even without the AT&T contract. Regardless, three weeks later, Tellabs called Ciena to say that the merger was off. The stock price plunged again, down to $8 a share.  Ciena had done nothing wrong and its product was fine, and yet the company was floundering and the management and staff were upset.

Ciena could have retreated — cutting costs, scaling back their ambitions and losing key staff.  Instead, Ciena played defense and waited for the right opportunity to take the initiative again.  First, Ciena paused to regroup and then — harnessing their collective will – decided to build a full-scale optical network themselves.  As a result, not a single engineer left Ciena.  Then Ciena found the right opportunity to take the initiative again. It decided to acquire two companies that had the customers and the technology that Ciena needed in order to grow. By 1999, Ciena had acquired Lightera Networks and Omnia Communications to create a full-service optical network with an optical-switching system.  By falling back and playing defense, Ciena was able to recover and then go forward again.

Today, 20 years later, Ciena Corporation is still a global supplier of telecommunications networking equipment, software and services that support the delivery and transport of voice, video and data service.  When it faced the challenges of the Tech Bubble of 2001-2002, Ciena once again played defense.  To strengthen its position, Ciena diversified its product offerings with internal development as well as a series of acquisitions and strategic partnerships. By 2004 Ciena had purchased a total of 11 firms with an aggregate value of over $3.3 billion.  With a broader range of offerings, Ciena gave customers a wider range of solutions and was able to compete for new customers in additional segments and regions.  Ciena’s continued ability to fall back, regroup and then push forward allowed Ciena to succeed while many of its rivals, such as Nortel, Alcatel Lucent, and others struggled.

Next week, we will examine four additional chess strategies that are invaluable for business:  Timing, Distance, Surprise and Deception, and Yielding.  Don’t miss it.

Quote of the Week

“Strategy requires thought, tactics require observation.”
Max Euwe, PhD, Dutch Chess Grandmaster

 

Leave a comment

How to Spot and Hire A Players for Key Positions

Word Count:  1857

Estimated Read Time:  7 ½ min.

When organizations hire employees for key positions, they want superstars.  They want rainmakers and movers-and-shakers.  Basically, they want A Players.  They certainly don’t set out to hire 10 % A Players, 80% B Players and 10% C Players.  But that’s what most companies have.  Still, it is fair to say that no recruiter ever hired someone knowing he would be a C Player, nor could he have known with certainty who was an A Player and who was a B Player.   If only 10% of the employees at most companies are A Players, then clearly HR departments are hiring lots of B and C Players.   That implies that it must be hard (or should we say nearly impossible) to distinguish between A, B and C Players. Continue reading

Leave a comment

A-Players vs. B-Players: Understanding the Value of Each Type of Employee

Word Count:  1546
Estimated Read Time:  6 min.

Employees are the most valuable resource of any company.  From Apple to DeBeers to Walmart, employees are the ones who lead, manage, create, innovate, implement, interact and engage with others on behalf of the company.  Only in the smallest companies do the owners perform the majority of the work.  In most other companies, employees do most of the work that generates profit.  For that reason, recruiting and hiring individuals with the skills and qualities to fit specific openings is the hardest thing any company does… even in the most successful organizations.  And it doesn’t matter if the position is an entry-level receptionist, a seasoned salesperson, a highly-technical professional position, or C-Suite executive.  Each opening has an ideal set of skills and qualities that would be the best fit for that job at that company.   But the more remarkable the skills and qualities needed in an employee, the harder it is to find the right person to fill that job. Continue reading

Leave a comment

When “Company Policy” Creates Lifelong Customers… for the Competition

Word Count:  1739 

Estimated Read Time:  7 min.

There are three little words that help businesses create lifelong customers more effectively than practically any other phrase:  “It’s company policy.”  The problem is that those words create lifelong customers for the competition of the company saying that to its customers.   For businesses that want to drive their customers to the competition, have at it.  Use that phrase to your heart’s content.  Better yet, just close your doors now and save yourself the time and slow agony of going out of business the old fashioned way… failure to make money. Continue reading

Leave a comment

Content Marketing: Quality vs. Quantity

Word Count:  1,570
Estimated Read Time:  6 min.

By now, most everyone has probably heard someone harping about the need for businesses to “tell their story” or “engage consumers with content” or “connect with customers on a personal level”.  For over a decade, the mantra among marketers has been that Content Is King.  Content is meant to attract and keep the attention of customers and potential customers.  As the saying goes, “Be careful what you ask for; you might just get it.”  Everyone jumped on the content bandwagon.  Ad agencies, marketing firms, public relations firms, SEO firms and media vendors all rushed in to help.   They all touted the need for “MORE CONTENT.”  The goal was quantity.  Tell stories.  Share information. Continue reading

Leave a comment

How to Become an Industry Insider or Influencer

Word Count:  1367
Estimated Read Time:  5½ min.

In general, an “insider” is a member of any group that is limited in number and generally restricted in access.  The person – by virtue of being a member of this group – has access to secret, privileged, hidden or otherwise obscure or complex information or knowledge.  The insider is a member of the “gang” and hence knows things outsiders don’t, including insider jargon.

The term “Industry Insider” has various meanings.  For example, in the world of securities trading, the term “Industry Insider” is generally used to describe someone who works for a publicly-traded company, or trusted advisor to that company, and possesses key information (often non-public information) about that company.  They know things because they are on the “inside.”  That information, if shared and/or used to influence stock trades, is illegal.  The Securities and Exchange Commission considers that a form of illegal insider trading. Continue reading

Leave a comment

Industry Insiders and Influencer Marketing

Reaching customers during their decision-making process is one of the most coveted goals of sales and marketing professionals.  Reaching someone at just the right time with just the right information can have a profound effect in influencing a purchase, especially if it is coming from a person of trust.  Say, for instance, a man is looking to invest money.  There will be many steps that go into the decision-making process of what to invest in.  He might read some recent articles about the stock market in reputable investment magazines.  He might get some advice from blogs written by investment gurus about investing in real estate.  He might hear a radio commercial featuring a celebrity recommending investing in bonds.   And he might get advice from friends and family members who have successfully managed their own investments.  Some of this advice will be considered and some will be discarded.  The man is more likely to listen to someone who is a trusted advisor, friend or colleague, especially if he is in the midst of the decision-making process. Continue reading

Leave a comment

When Teamwork Breaks Down

It was recently reported that Usain Bolt – dubbed the world’s fastest runner – was stripped of one of his nine Gold medals.  Unlike other occasions when athletes have lost a medal or award, in this case Bolt himself did nothing wrong.  He was not guilty of cheating or unsportsmanlike conduct.  Rather, Bolt lost the Olympic gold medal because his teammate, Nesta Carter, tested positive for a banned stimulant found during a re-analysis of samples from the 2008 Beijing Olympics.  Carter and Bolt were teammates on the winning 4×100-meter team, which set a world record of 37.10 seconds. Carter ran the opening leg, and Bolt took the baton third in the race.  But doping by even one member of the team disqualified the entire team – four athletes – from the competition. Continue reading

Leave a comment
WordPress Appliance - Powered by TurnKey Linux